A: The Takaful and Insurance Benefits Protection System (TIPS) is a system established by the Government to protect owners of takaful certificates and insurance policies from the loss of their eligible takaful or insurance benefits in the event that an insurer member fails and is unable to honour the takaful or insurance benefits. TIPS is administered by PIDM.

A: All takaful operators licensed under the Islamic Financial Services Act (IFSA) 2013 to conduct family and/or general takaful business in Malaysia, as well as insurance companies (including locally incorporated subsidiaries of foreign insurance companies operating in Malaysia) licensed under the Financial Services Act (FSA) 2013 to conduct life and/or general insurance business in Malaysia are member institutions of PIDM. Membership in PIDM is compulsory as provided under Akta Perbadanan Insurans Deposit Malaysia.

Takaful operators and insurance companies which are member institutions of PIDM are referred to as ‘insurer members’. Look out for this membership sign at the entrance to the offices of your takaful operator or insurance company.

A: The takaful and insurance benefits protected under TIPS and related limits are set out in Tables 1 and 2 below.

Table 1: Protected Benefits for Family Takaful and Life Insurance

TABLE 1

FAMILY TAKAFUL / LIFE INSURANCE

Benefits Protected

Maximum Limit (Individual or Group Policies/Plans)

Death and related benefits

RM500,000

Permanent disability

RM500,000

Critical illness

RM500,000

Maturity value (excluding unit portion of investment-linked policies)

RM500,000

Surrender value

RM500,000

Accumulated cash dividends

RM100,000

Disability income

RM10,000 per month

Annuity income

RM10,000 per month

Medical expenses

100% of expenses incurred

Refundable prepaid premiums

100% of amount prepaid

Table 2: Protected Benefits for General Takaful and General Insurance

TABLE 2

GENERAL TAKAFUL / GENERAL INSURANCE

Benefits Protected

Maximum Limit (Policies/Plans)

Loss of or damage to property in relation to:

an immovable property located in Malaysia

a motor vehicle registered in Malaysia or a foreign registered vehicle insured to drive in Malaysia

a ship, aircraft or other movable property insured by a citizen or qualified person1

RM500,000 per property

Death and related benefits

RM500,000

Permanent disability

RM500,000

Critical illness

RM500,000

Disability income

RM10,000 per month

Medical expenses

100% of expenses incurred

In relation to indemnification against claims by a third party:

loss of or damage to eligible third party immovable or movable property

death and related benefits

permanent disability

illness or bodily injury

disability income

medical expenses

RM500,000 per property

RM500,000

RM500,000

RM500,000

RM10,000 per month

100% of expenses incurred

Refundable prepaid premiums

100% of amount prepaid

To be eligible for protection under TIPS, the takaful certificate or insurance policy must be issued in Malaysia by an insurer member and be denominated in Ringgit Malaysia. Any claims by certificate or policy owners will be subject to the conditions and limits specified in their takaful or policy contracts.

1Qualified person includes resident, corporation, statutory body, local authority, embassy, the Government or any State Government, society, trade union, cooperative society, partnership or any other body, organisation, association or group of persons, whether incorporated or unincorporated, in Malaysia.

A: Examples of takaful or insurance benefits not protected under TIPS include takaful certificates and insurance policies denominated in foreign currency, as well as pecuniary loss incurred due to acts of dishonesty by employees and damage payable for professional negligence. The investment portion of investment-linked certificates or policies is not protected, but the takaful and insurance portion of that certificate or policy is protected under TIPS.

A: Yes. The benefits protected under your individual certificate or policy and a group certificate or policy will be calculated separately in arriving at the maximum limit. This is because the protection system provides separate limits for different policy owners and beneficiaries, allowing you to enjoy more protection.

A: No. Your takaful and insurance benefits with different insurer members are protected separately. The protected benefits under TIPS will be aggregated only if they relate to the “same insurer member, same risk event, same life insured or insured property, and same takaful certificate or policy owner”.

A: Each life insured is separately protected. This means even if you have purchased several takaful certificates or insurance policies for different family members from the same insurer member, you will be protected based on each individual family member who is insured. You may refer to this example:

Mr. and Mrs. Tan purchased several life insurance policies for their family from the same insurer member.

A: No. Protection for your takaful certificate and insurance benefits under TIPS is not a commercial takaful or insurance policy you can purchase. It is provided by the Government through PIDM. You do not have to register or apply for protection under TIPS as it is provided automatically for eligible takaful or insurance benefits.

A: Your takaful or insurance benefits will continue to be protected separately until the fulfilment of all obligations by the insurer members, including the payment upon occurrence of a claims event, maturity or surrender of the takaful certificate or insurance policy.

A: If an insurer member fails and is unable to honour the takaful or insurance benefits under TIPS, PIDM will make a payment of the protected benefits to the certificate or policy owners upon occurence of the claims event, maturity or surrender of the takaful certificate or insurance policy.

PIDM may also arrange for transfer of takaful certificates or insurance policies from the failed insurer member to another insurer member to secure continuity of coverage for takaful certificate or insurance policies owners.

A: In the event that PIDM is required to resolve a troubled insurer member, we will announce how, where and when payments for your takaful or insurance benefits protected under TIPS would be made. Claims must be lodged with PIDM upon occurrence of the claims event, maturity or surrender of the takaful certificate or insurance policy within a specified time frame. You will be notified of this time frame by PIDM in writing and by newspaper advertisement.